Citizens for Tax Justice (online journal issue #10) provides a nice post about the case before the Supreme Court dealing with Ohio's corporate tax break.
The Supreme Court heard oral arguments this week in a case that could help stop the widespread and irresponsible use of costly state corporate tax incentives. In the Cuno v. DaimlerChrysler case, the Court will decide whether a federal appeals court was correct when it ruled in 2004 that an Ohio investment tax credit given to DaimlerChrysler violated the U.S. Constitution’s Commerce Clause. If the Court agrees that these special corporate tax breaks impede interstate commerce, it will be an important first step toward revitalizing state corporate income taxes, making it at least somewhat more difficult for states to engage in "smokestack chasing" corporate tax breaks. Good Jobs First offers a first-hand account of the Court’s hearing here. A good overview of the issues surrounding Cuno can be found here. This article chronicles the destructive "tax break tug of war" between the states that the Cuno case might help prevent. And for a stark reminder of why state corporate tax breaks pose a danger to state governments, check out this ITEP report.
These state tax breaks are generally inefficient, because in the vast majority of cases they reward companies for placing factories where they had planned to place them even without the breaks. As Greg LeRoy noted (see second link above), it is a little like "using dynamite to catch fish." And that means a considerable waste of tax monies in every state that attempts to create jobs by buying corporate placements.
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